INDIAN ECONOMY TEST - 6-Indian Economy-Quiz

Civil Services Exams-INDIAN ECONOMY TEST - 6

Q 1.
The concept of black swan related to unexpected events creating financial and economic destruction was advocated by:

a.)
Paul Krugman
b.)
Joseph Stiglitz
c.)
Milton Friedman
d.)
Nassim Nicholas Taleb

Q 2.
The Moral hazard problem in the financial system can be broken by:

a.)
Raising more capital by the owners
b.)
Enhancing loan disbursal
c.)
Raising more savings
d.)
Providing macro financial safety nets

Q 3.
Which of the following statement is related with moral hazard cited by policy makers?

1. An entity takes more risk knowing that some other will pay if it fails.

2. Government is depending on excessive debt to finance its expenditure.

a.)
1 and 2 correct
b.)
Only 1 is correct
c.)
Only 2 is correct
d.)
Neither 1 nor 2 is correct

Q 4.
The paradoxical situation of high price of diamond that has low consumption use, but low price for water that has high consumption use can be attributed to:

a.)
Total cost
b.)
Marginal utility
c.)
Tax
d.)
Consumer surplus

Q 5.
The concept of diminishing returns says that:

a.)
There is decreasing level of output as production goes
b.)
There is decreased use of inputs with high output
c.)
There is decreasing cost as output level increases
d.)
There is low demand with low economic growth

Q 6.
The opportunity cost for foreign investment is:

a.)
High
b.)
Low
c.)
Zero
d.)
Unity

Q 7.
Which of the following items have the feature of non-exclusion and non-rivalry?

a.)
Non-merit goods
b.)
Merit goods
c.)
Public Goods
d.)
Private Goods

Q 8.
Consider the following statements about free rider problem:

1. Free rider problem is an instance of market failure

2. The goods and services that are suffered from free rider problem are under produced and overutilized.

3. Consumers show a tendency to use them without making any reciprocal payment.

4. Free rider problem can lead to the situation of tragedy of the commons.

Of these, the correct statements are:

a.)
1, 2, 3 and 4
b.)
1, 2 and 3
c.)
2 and 4
d.)
2, 3 and 4

Q 9.
External economies in a production process refers to:

a.)
Positive effects from the actions third parties.
b.)
Negative effects due to the actions outside its control
c.)
Decline in welfare due to reduced government expenditure
d.)
Increased cost of production due to the rise in the price of inputs.

Q 10.
The phenomenon of increased number of people or participants improve the value of a good or service is called:

a.)
Ratchet effect
b.)
Bandwagon effect
c.)
Demonstration effect
d.)
Network effect

Listed 1 of 2